A low rate credit card offers credit card users the convenience of a credit card at a lower interest rate than the rest of the market offers. However sometimes the concept is not as simple as it seems.
Many of the reasons that interest rates on credit cards are high can be overcome by some clever shopping. For example credit cards from the major banks tend to have higher interest rates than the market leading credit cards as the major banks tend to rely on their existing customer base and brand name to get customers, and feel less need to compete on price. Credit cards from stores, airlines and other non-financial companies tend to be more expensive as they offer credit for people who are after the discounts and upgrades that can be offered on these cards. Similarly cards that accept a wide range of people, particularly those with lower credit ratings and those who accept applicants quickly have higher interest rates.
Shopping around for credit cards can significantly cut the interest rates that are paid. This helps to unearth low rate credit cards.
However after a certain level then there do need to be decisions made about how low the interest rate should actually go without giving up other advantages.
No frills credit cards can offer very low interest rates but they do not have the perks that other credit cards have. For example they do not tend to offer rewards programs, which can add significantly to a credit card’s interest rate. It is also very rare for a low rate credit card to offer insurance on products that are bought with the credit card. This can include purchase insurance for goods breaking or being lost within the first few months of purchase as well as travel insurance when buying plane tickets. Similarly it is a good idea to make sure that the interest free grace period is acceptable.
Beyond this there are different types of low rate credit cards. Many credit cards charge an introductory rate that is considerably lower than the market interest rate. However these rates run out after a few months, and then the rate returns to its normal rate.
There are also long term low rate credit cards. These can have lower rates for either balance transfers or balances that come from spending on the card, and these rates can differ.
